Sequester Insanity

Why the Pentagon budget cuts are far worse than you think.

The Pentagon is about to become a crazier place to work, and not because Chuck Hagel has taken the helm. It’s because of sequestration, which, if it really does happen on March 1, could twist and twirl the world of defense contracting into contortions heretofore unseen. The mainstream news stories and editorials on the subject have not conveyed the full nuttiness of what’s about to blow.

When officials first raised the alarms, many scoffed at the hype. As part of the across-the-board reductions in the federal budget, the Pentagon would have to cut $46 billion, or about 9 percent of its budget. That’s a lot, but it’s not catastrophic. There were plenty of weapons that could be cut or delayed—the disaster-prone F-35 stealth fighter, far-from-urgent upgrades of nuclear weapons, a few shipbuilding projects, the list goes on. And there were the savings to be wrought from the end of the Iraq War and the drawdown in Afghanistan.

Unfortunately, the solution isn’t so simple. According to the explicit language of the budget act (and of the interpretation laid down by the Office of Management and Budget), the Pentagon’s managers are not allowed to pick and choose which programs to cut. That is, they’re not allowed to do what managers are supposed to do in these situations—set priorities, make trade-offs, and align strategy with resources.

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Rather, every single program, project, and activity—every line item in the Pentagon budget, from the biggest weapon system to the smallest spare part—has to be cut by that same 9 percent. Not 10 percent or 8 percent or 20 percent or 2 percent (even if it might make more sense to cut some of them by these larger or smaller numbers), but rather by 9 percent.

Take the Navy’s shipbuilding account, which amounts to $13.6 billion in the fiscal year 2013 budget. Sequestration requires the Navy to do more than simply cut that by $1.2 billion. Doing just that might be easy, if a bit arbitrary or politically difficult. The Navy also has to take the $3 billion allocated for two new DDG-51 destroyers and cut that by $270 million. It has to take the $608 million in progress-payments for work on a new nuclear aircraft carrier and cut that by $55 million. The $180 million appropriated for one ship called the Joint High-Speed Vessel has to be cut by $16 million. How do the Navy managers do this? Do they renegotiate a lower price for certain clauses of the contract? Do they go slower on buying bolts or doing the paint job?

As for the $628 million appropriated to buy 78 of the Army’s Patriot missiles, it might be simple arithmetic to cut that by $56 million. (Buy seven fewer missiles?) But what about the $179 million allotted for modifications to the AH-64 Apache helicopter? How do the Army’s managers parse that? And how does anyone, whether in Congress or the Pentagon’s comptroller office, perform oversight of that feat, this year and in the near future? Not only is the exercise disruptive and in some cases absurd, it also creates excuses for contractors to bilk the Pentagon after the budget crisis is over, claiming that they suffered cost overruns as a result of inefficiencies brought on by sequestration. Who could dispute that?

The Pentagon and the OMB hammered out some exemptions to the item-by-item rule. Military personnel are exempt from any cuts whatsoever. This is why the Defense Department has to furlough nearly everyone in its civilian workforce; that’s the only way to meet the required budget cut for personnel overall. Specifically, civilians will have to take one day off per week, without pay, for the last 22 weeks of this year.

Another partial exemption: The armed forces will be given some flexibility in cutting the accounts for operations and maintenance, which includes money for fuel, training, bases, facilities, war theaters—the stuff that keeps the military machine humming day to day. The across-the-board cut will be applied to the operations and maintenance accounts of each service (Army, Air Force, Navy, and Marine Corps), but the service chiefs can each set their own priorities on how to do the cutting and reshuffling of resources.

This is significant. It means that the services can defer funds for repairing rusty pipes on some bases in order to protect funds for fuel and training, at least to some extent. In this sense, as Amy Belasco of the Congressional Research Service has written, sequestration might not be as damaging to “military readiness” as some of the chiefs have claimed. It makes sense that the Air Force has canceled some public air shows. It’s less clear why the Navy felt it had to dock an aircraft carrier rather than deploy it, as had been scheduled, into the Persian Gulf. That may be a case of crying wolf.

However, to re-emphasize, this is not the case for any other part of the defense budget—procurement, research and development, weapons testing, or personnel (except military personnel). If it were the case, sequestration might be a brute-force way to compel cuts in the budget that the chiefs would otherwise have time to deflect or oppose. Then again, the items they would slash under pressure wouldn’t necessarily be the items that a more “objective” analyst might choose. In any case, the point is moot. Everything in those accounts has to be cut by the same amount, line-item by line-item.

It’s no way to run an army (or anything else). Then again, all the players knew that when they put up sequestration as the automatic result if they failed to reach an agreement on taxing and spending. The idea was that they would certainly reach an agreement because the alternative was so crazy. The problem, no one stopped to think, is that the Republicans in Congress are even crazier.